Main points of investment:
After different industry development stages, establish advantages and successfully grasp the trend of the boutique game CP side.
Baiao has accumulated a number of important IP in the page game era, and its "Obi Island", "Ola Star" and "Ochi Legend" sit on the Z-generation mental flow entrance, and successfully transform to achieve "page change" great-leap-forward development. Under the trend of boutique in the game industry, companies with outstanding IP power and self-research power are more worthy of attention, and will have more industry pricing power.
Focus on three major tracks, "IP+ popular style + hyperevolution" strategy is clear: the company ploughs pet competition, female orientation and two-dimensional three major tracks, the potential market scale and high growth of the three major tracks provide guarantee for the development prospects of the company's mobile game business. Upgrade and iterate the original products on the basis of the existing IP reserves, create a series of IP popular styles, expand the coverage of the game IP to the public domain, and open up overseas markets to expand the game layout to the whole world.
From the main products to see the different dimensions of the company's capabilities: 1) "Aura Star Mobile Games": reflect the company's long-term operation ability. At the initial stage of launch, the score dropped to 5.2, but the company continued to adjust and optimize. Through efforts to reverse the game's reputation, the TapTap score rose from 5.2 to 8.5 in two years and is now stable at around 7.2. 2) "Shiwuyu", "time sequence ringing": reflects the company's ability of self-research. "Shiwuyu" uses unique food personification creativity, the plot and play are in the best level of women to the track, rich play to improve the game LTV, linkage with traditional culture to enhance product value, has been the main contribution to the company's performance since its launch. "time sequence residual sound" is one of the company's next important products, the two-dimensional surreal theme has high novelty, its own flow attribute, TapTap reservation and score are in a high position, through this product will also achieve the company's 2D to 3D upgrade R & D pipeline upgrade.
3) "Obi Island Mobile Tour": reflects the company's IP evolution ability. Based on the classic childhood IP "Obi Island Page Tour", the Obi Island mobile game launched after the iteration of "Page change hands", the popularity of the game word-of-mouth has been maintained after the launch, showing the potential of long-term operation. The big niche market based on social networking + leisure play, coupled with the game content and operation experience accumulated by many years of page game operation experience, abundant R & D resources + in-depth TOC operation to gain player insight, player LTV outlook is optimistic, with the improvement of user age is expected to achieve the improvement of user group ARPPU.
Profit forecast and investment advice: it is estimated that 2022-2024 revenue CAGR will reach 27%, and home net profit CAGR will reach 84%. We choose the PS method to value 1.5x PS in 2022, with a target market value of 1.763 billion HKD and a target price of 0.62HKD. Cover for the first time, giving a "buy" rating.
Risk tips: the risk that the progress of the game online is not as expected, the risk that the head game revenue is not as expected, and the risk of tightening the game regulatory policy.